Sensitive ethics case

CFA Level III Ethics
#1

According to the Code & Standards, materials which were used for investment decision must be kept for 7 yrs in minimum if applicable laws and regulations do not exist. But, if I (my company) have an NDA with a disclosing party including a clause “disposal of confidential information” saying receiving party (myself) must destroy such information upon the request from the disclosing party, which should I follow? CFA Code or the NDA? L3 ethics cases are complex and the Institute tests candidates by asking these type of ambiguity.

#2

Pretty sure seven years was only a recommendation and not a requirement.

#3

Follow the NDA. The info provided by the other party is special and used for a private transaction / analysis.

CFA Institute 7-year requirement talks more about info used to present investment recommendations to clients and prospective clients or company daily operations. Not even close to the case above.

#4

oh, you are right. Recommendation, not mandatory requirement.

#5

The situation on the NDA is related to M&A, and I have to rewrite it to formulate an investment pitch book on this private equity deal for prospective strategic investors. Even so, wondering if I need to follow the NDA according to the CFA Code?

#6

NDA is a private agreement between Disclosing Party and Receiving Party and it is a normal but kind of mandatory clause to destroy the information on the request of Disclosing Party. These NDAs are executed in good faith and carry the understanding between these two parties only. So dont confuse this with the Ethical standards of CFAI which has a different scope. Furthermore in such legal aggrements there are several clauses present for the protection of both the parties such as information being provided is on the best of the knowledge of Disclosing Party along with several indemnification clauses which may not go well with CFAI ethical standards.

#7

Thanks for your clarification. Understood that private agreement between two parties is out of scope of the Code, and need to follow the signed agreement such as the NDA, right?